Key findings of the 2011 Progress Report on Bosnia and Herzegovina

12.10.2011.

The Progress Report on Bosnia and Herzegovina is part of the 2011 Enlargement Package adopted by the European Commission on 12 October. The conclusion of the Report was that the overall pace of reforms has been very limited. Some results were achieved – visa liberalisation for travel to the Schengen area was granted to the citizens of Bosnia and Herzegovina holding biometric passports. Within the established framework of the Stabilisation and Association Process, Bosnia and Herzegovina has engaged with the EU in a Structured Dialogue on Justice. However, the failure to reach a political agreement on the formation of state-level authorities has hampered Bosnia and Herzegovina’s progress on key reforms needed to make further progress towards European Union integration. The Constitution remains to be harmonised with the European Convention on Human Rights and the State Aid Law needs to be adopted at the state level. A common understanding by the political representatives on the overall direction and future of the country and its institutional setup remains necessary. The European Union accession process requires functional institutions at all levels and an effective coordination mechanism on European Union matters.

Political criteria

Bosnia and Herzegovina has made limited progress in addressing the political criteria. One year after the general elections held on 3 October 2010, the process of establishing executive and legislative authorities remains to be completed with the establishment of a State-level Government. This long delay has had a negative impact on Bosnia and Herzegovina’s much-needed reforms. The Council of Ministers issued a decision regarding the establishment of a new working group to harmonise the Constitution with the European Court of Human Rights (ECtHR) ruling in the Sejdic-Finci case . The lack of a credible process for the harmonisation of the Constitution with the above ECtHR ruling remains an issue of serious concern. A State-levelState Aid Law has been adopted by the Council of Ministers but adoption by the Parliamentary Assembly is pending. The adoption of a State-level Census Law remains essential for the socio-economic development of Bosnia and Herzegovina.

The complicated decision-making process contributed to delaying structural reforms and to reducing the country’s capacity to make progress towards European Union integration. The coordination mechanisms between the State-level and all authorities on EU-related matters require substantial strengthening.

The implementation of the public administration reform strategy continued, but coordination between the various administrations remained weak. The public administration reform process and the institutions in charge of its implementation lack the necessary political support to bring about reforms. A single State-level Ombudsman is functioning, but staffing and financial constraints hamper its effectiveness.

Little progress was made as regards the rule of law. A director and his deputies have been appointed to head the Anti-corruption Agency, but the Agency is not yet operational. Corruption remains a serious problem and is prevalent in many areas. Cooperation with the International Criminal Tribunal for the former Yugoslavia as well as the prosecution of war crime cases by the State Court continued to be satisfactory. More efforts are necessary to ensure effective implementation of the Justice Sector Reform Strategy and the War Crimes Strategy. The frequent political attacks on the judiciary and the backlog of cases remain causes for serious concern.

As regards human rights and the protection of minorities, despite some progress in implementing the Roma Strategy, the Roma minority continues to face very difficult living conditions and discrimination. Political pressure on the media continued, as did its ethnic bias. Cases of intimidation against journalists also continued. Despite the establishment of a coordination body in the Federation, the number of divided schools (’two schools under one roof’) and mono-ethnic schools remains a cause for concern. Significant progress was made with regard to the Sarajevo Declaration Process on refugees and displaced persons. Cooperation between the courts and prosecutors from Bosnia and Herzegovina, Croatia and Serbia is ongoing.

Economic criteria

Bosnia and Herzegovina has made little further progress towards a functioning market economy. Considerable further reform efforts need to be pursued to enable the country to cope over the long-term with the competitive pressures and market forces within the Union. The economy of Bosnia and Herzegovina gained some speed in 2011 but the recovery is still subdued and mainly driven by external demand. Unemployment remained at very high levels.

The fiscal situation eased somewhat as a result of fiscal adjustment measures implemented under the programme of the International Monetary Fund and increased revenues. However, medium-term fiscal sustainability was severely hampered by the failure to adopt the Global Framework for Fiscal Policies 2011-2013. The commitment to structural reforms and sound public finances remained weak and uneven across the country, and the quality of public finances remained low. Despite some improvements, the business environment continues to be affected by administrative inefficiencies and a weak rule of law. Planned privatisation, restructuring of public enterprises and the liberalisation of network industries did not advance. Substantial efforts remain necessary in order to achieve a single economic space.

EU Legislation

Some progress has been made in aligning the country’s legislation, policies and capacity with European standards in areas such as free movement of goods, intellectual property, state aid, research, culture, transport and in a number of justice, freedom and security-related matters. In the field of energy, some progress was achieved regarding the supply of electricity to Brcko District and the launch of a comprehensive review of the electricity legislation.Progress remains insufficient in other areas, such as the free movement of goods, persons and services, customs and taxation, competition, public procurement, employment and social policies, education, industry and SMEs, agriculture and fisheries, food safety, veterinary and phytosanitary sectors, environment and climate change, energy, information society and media and statistics. A comprehensive energy strategy needs to be adopted and a country-wide functioning national transmission company established. Sustained efforts in sensitive areas such as the fight against corruption and organised crime are also a priority.

EU-BOSNIA AND HERZEGOVINA: KEY DATES1999: The EU proposes the new Stabilisation and Association Process for five countries of South-Eastern Europe, including Bosnia and Herzegovina.June 2000: The European Council states that all the Stabilisation and Association countries are “potential candidates” for EU membership.June 2003: The Thessaloniki Summit confirms the EU perspective for these countriesNov 2005: SAA negotiations between the EU and BiH are officially launched.May 2008: Launch of the Visa liberalisation dialogue.June 2008: Signature of the Stabilisation and Association Agreement and Interim Agreement on trade and trade-related issues.May 2010: The European Commission adopted a proposal enabling citizens of Albania and Bosnia and Herzegovina to travel to Schengen countries without needing a short term visa.December 2010: Visa liberalization was granted for travel to the Schengen area to citizens from Bosnia and Herzegovina holding biometric passportsFor more information:http://ec.europa.eu/enlargement/press_corner/key-documents/reports_oct_2011_en.htm

The Progress Report on Bosnia and Herzegovina is part of the 2011 Enlargement Package adopted by the European Commission on 12 October. The conclusion of the Report was that the overall pace of reforms has been very limited. Some results were achieved – visa liberalisation for travel to the Schengen area was granted to the citizens of Bosnia and Herzegovina holding biometric passports. Within the established framework of the Stabilisation and Association Process, Bosnia and Herzegovina has engaged with the EU in a Structured Dialogue on Justice. However, the failure to reach a political agreement on the formation of state-level authorities has hampered Bosnia and Herzegovina’s progress on key reforms needed to make further progress towards European Union integration. The Constitution remains to be harmonised with the European Convention on Human Rights and the State Aid Law needs to be adopted at the state level. A common understanding by the political representatives on the overall direction and future of the country and its institutional setup remains necessary. The European Union accession process requires functional institutions at all levels and an effective coordination mechanism on European Union matters.

Political criteria

Bosnia and Herzegovina has made limited progress in addressing the political criteria. One year after the general elections held on 3 October 2010, the process of establishing executive and legislative authorities remains to be completed with the establishment of a State-level Government. This long delay has had a negative impact on Bosnia and Herzegovina’s much-needed reforms. The Council of Ministers issued a decision regarding the establishment of a new working group to harmonise the Constitution with the European Court of Human Rights (ECtHR) ruling in the Sejdic-Finci case . The lack of a credible process for the harmonisation of the Constitution with the above ECtHR ruling remains an issue of serious concern. A State-levelState Aid Law has been adopted by the Council of Ministers but adoption by the Parliamentary Assembly is pending. The adoption of a State-level Census Law remains essential for the socio-economic development of Bosnia and Herzegovina.

The complicated decision-making process contributed to delaying structural reforms and to reducing the country’s capacity to make progress towards European Union integration. The coordination mechanisms between the State-level and all authorities on EU-related matters require substantial strengthening.

The implementation of the public administration reform strategy continued, but coordination between the various administrations remained weak. The public administration reform process and the institutions in charge of its implementation lack the necessary political support to bring about reforms. A single State-level Ombudsman is functioning, but staffing and financial constraints hamper its effectiveness.

Little progress was made as regards the rule of law. A director and his deputies have been appointed to head the Anti-corruption Agency, but the Agency is not yet operational. Corruption remains a serious problem and is prevalent in many areas. Cooperation with the International Criminal Tribunal for the former Yugoslavia as well as the prosecution of war crime cases by the State Court continued to be satisfactory. More efforts are necessary to ensure effective implementation of the Justice Sector Reform Strategy and the War Crimes Strategy. The frequent political attacks on the judiciary and the backlog of cases remain causes for serious concern.

As regards human rights and the protection of minorities, despite some progress in implementing the Roma Strategy, the Roma minority continues to face very difficult living conditions and discrimination. Political pressure on the media continued, as did its ethnic bias. Cases of intimidation against journalists also continued. Despite the establishment of a coordination body in the Federation, the number of divided schools (’two schools under one roof’) and mono-ethnic schools remains a cause for concern. Significant progress was made with regard to the Sarajevo Declaration Process on refugees and displaced persons. Cooperation between the courts and prosecutors from Bosnia and Herzegovina, Croatia and Serbia is ongoing.

Economic criteria

Bosnia and Herzegovina has made little further progress towards a functioning market economy. Considerable further reform efforts need to be pursued to enable the country to cope over the long-term with the competitive pressures and market forces within the Union. The economy of Bosnia and Herzegovina gained some speed in 2011 but the recovery is still subdued and mainly driven by external demand. Unemployment remained at very high levels.

The fiscal situation eased somewhat as a result of fiscal adjustment measures implemented under the programme of the International Monetary Fund and increased revenues. However, medium-term fiscal sustainability was severely hampered by the failure to adopt the Global Framework for Fiscal Policies 2011-2013. The commitment to structural reforms and sound public finances remained weak and uneven across the country, and the quality of public finances remained low. Despite some improvements, the business environment continues to be affected by administrative inefficiencies and a weak rule of law. Planned privatisation, restructuring of public enterprises and the liberalisation of network industries did not advance. Substantial efforts remain necessary in order to achieve a single economic space.

EU Legislation

Some progress has been made in aligning the country’s legislation, policies and capacity with European standards in areas such as free movement of goods, intellectual property, state aid, research, culture, transport and in a number of justice, freedom and security-related matters. In the field of energy, some progress was achieved regarding the supply of electricity to Brcko District and the launch of a comprehensive review of the electricity legislation.Progress remains insufficient in other areas, such as the free movement of goods, persons and services, customs and taxation, competition, public procurement, employment and social policies, education, industry and SMEs, agriculture and fisheries, food safety, veterinary and phytosanitary sectors, environment and climate change, energy, information society and media and statistics. A comprehensive energy strategy needs to be adopted and a country-wide functioning national transmission company established. Sustained efforts in sensitive areas such as the fight against corruption and organised crime are also a priority.

EU-BOSNIA AND HERZEGOVINA: KEY DATES1999: The EU proposes the new Stabilisation and Association Process for five countries of South-Eastern Europe, including Bosnia and Herzegovina.June 2000: The European Council states that all the Stabilisation and Association countries are “potential candidates” for EU membership.June 2003: The Thessaloniki Summit confirms the EU perspective for these countriesNov 2005: SAA negotiations between the EU and BiH are officially launched.May 2008: Launch of the Visa liberalisation dialogue.June 2008: Signature of the Stabilisation and Association Agreement and Interim Agreement on trade and trade-related issues.May 2010: The European Commission adopted a proposal enabling citizens of Albania and Bosnia and Herzegovina to travel to Schengen countries without needing a short term visa.December 2010: Visa liberalization was granted for travel to the Schengen area to citizens from Bosnia and Herzegovina holding biometric passportsFor more information:http://ec.europa.eu/enlargement/press_corner/key-documents/reports_oct_2011_en.htm